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Three Letters That Will Make Your Company More Successful and Sustainable A strong ESG score can improve your company's relationship with consumers, investors, and the planet.

By Brendan P. Keegan

Opinions expressed by Entrepreneur contributors are their own.

In September 2022, Patagonia founder Yvon Chouinard gave away his entire $3 billion company to ensure all of its profits would be used to combat climate change. The bold and generous decision represents a corporate shift toward environmental, social, and governance, better known as ESG.

What is ESG? The term refers to increasingly important company standards in which decision-makers look not only at the company's balance sheet but also its environmental, social, and governance policies.

ESG advocates say this approach helps safeguard the planet, paves the way for more diversity in the workplace, and protects fair wages.

But ESG also makes good business sense. According to PWC, 80% of consumers make sustainability-based purchase choices, while 83% of buyers believe companies should actively shape ESG best practices.

Because consumers are using their dollars to support responsible businesses, business leaders consider implementing an ESG strategy. Here are five ways.

1. Be intentional in pursuing ESG operations

Lots of companies do good things without explicitly aiming to be ESG-focused. But deliberately choosing ESG processes offers a framework for your business' legacy.

Take a look at Patagonia. Chouinard decided to make sustainability central to the brand at the outset, mainly by focusing on renewable and recycled materials. Giving away the business to a climate-centered trust and non-profit organization is the capstone of that original purpose.

Intentionally embracing ESG in your vision and policies means you'll have a compass to consistently direct your projects, strategies, materials, and goals, which will build employee and buyer trust.

Related: 3 Steps for Making a Positive Environmental, Social and Governance (ESG) Impact

2. Move to electric vehicles

Think about how you get your packages. Fleets of vehicles typically shuttle your stuff from the store or warehouse to your door. Other vehicles are responsible for transporting materials through the supply chain or getting workers to the office and other work events.

All these vehicles on the road translate to a big chunk — 28% — of total greenhouse gas emissions. Using electric vehicles (EVs) is a simple way to reduce your carbon footprint, even when you can't shift much else.

Light-duty vehicles are the worst offenders and account for 59% of vehicle emissions. So, if it makes sense for your business, focus on switching out those vehicles first.

Another bonus: EVs can function as mobile billboards for your business. Every time you or an employee takes a company-branded EV for a spin, the vehicle pulls extra weight by advertising for you. That's significantly more visible — not to mention easier to scale and reassign — than your office building certified in Leadership in Energy and Environmental Design (LEED) but doesn't have any customers who visit.

Related: 3 Changes You Should Expect To See in Transportation in 2022

3. Assess your supply chain

The supply chain connects everything from your raw materials to distribution. ESG means taking ownership of as many links as possible and asking yourself what you can do to apply it at every point.

Be transparent as you examine how inventory gets from Point A to Point B. Even though 81% of companies still need complete supply chain visibility, 75% of consumers consider transparency helpful in strengthening customer-business trust.

When consumers feel like a business has violated that trust, they take action. In 2020, 38% of Americans boycotted at least one company. Communicate whatever you're doing to keep your operations squeaky clean on your website, in your marketing emails, on your packaging, and anywhere else you can display your messages.

4. Clean up your power

Every business uses power to some degree, but the kind of energy you use can impact the environment. Because traditional fossil fuels like coal and petroleum contribute to global warming, companies are looking to transition to cleaner energy sources, such as solar and wind power.

Yes, clean energy can be expensive. But the costs of green energy were already at record lows in 2019. In 2021, almost two-thirds of new renewable power added was less expensive than the cheapest coal-fired power plants in G20 countries.

Government assistance can also cut the financial sting. Look into tax credits available through the Build Back Better bill. You may qualify at the local, state, and federal levels.

5. Bring your employees into the fold

Your team members are your best brand advocates. But they can't share what they don't know. Your first responsibility is to work on your culture so that people feel comfortable asking what you're doing in different ESG areas. Start conversations about where you're at and where you'd like to be.

Then, get creative about how you can make ESG visible in ways that are practical for your business — even beyond the environmental space. At our company, to support diversity and gender equality within ESG, we partnered with an organization that features male and female drivers. We also intentionally ensure half of our leadership team consists of women, and we feature female employees on panels.

Related: Why You Need to Build Sustainability Into Your Business Strategy

Customers have moved past the days when a good product or service was enough. Now more than ever, the marketing axiom that consumers buy from brands they trust rings true. Your purpose and values count. Bringing ESG into your business meets people where they are and help you make a lasting difference.

Brendan P. Keegan

Chairman, CEO and President of Merchants Fleet

Brendan P. Keegan serves as Chairman, CEO and President at Merchants Fleet and was recently named the World’s Most Innovative CEO by CEO World Awards. Keegan is also the silver winner of Executive of the Year by Best in Biz Awards and a Stevie Awards bronze winner by American Business Awards.

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